Plus: AKS, WNC and short-term overbought

LawrenceG. McMillan & David Nassar

BOULDER, Colo. (MarketWatch) - Our mission is to provide the most practical information for option traders and your questions and feedback allows us to provide relevant information a trader can use. During each issue, we will highlight subscriber questions that most likely represent the masses. Feedback is strongly encouraged. Send your e-mails to lmcmillan@optionstrategist.com.

Commentary

Last week, we noted that the intermediate-term indicators had turned bullish as of the upside breakout on March 24. However, the stock market itself wasn't so easily convinced. The Standard & Poor's 500 Index
SPX, +0.29%
fell back 50 points from then until the end of the month, as institutions apparently looked to lighten up their portfolios before mandatory end-of-quarter reporting periods. That selling brought the indicators to the brink of turning bearish, or at least canceling out the recent buy signals, but they held on by their fingernails. Now, with the near 400-point rally by the Dow Jones Industrial Average
DJIA, +0.25%
yesterday, everything is safely bullish again, as far as the intermediate-term indicators go.

The $SPX chart has proven to be difficult to analyze, from the viewpoint of conventional support and resistance. It sliced through the 1320-1340 area several times without pausing. Thus, that area can no longer be declared either support or resistance. However, the major edges of the trading range are still valid: support at 1260-1270, and resistance at 13909-1400. Also since the March lows, there is a pattern
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